For Metro Diner, franchising is over, but expansion is not

Three years ago, things were changing quickly for the Davoli family and its Metro Diner. The San Marco restaurant had just been featured on the TV show “Diners, Drive-ins and Dives” and business exploded.

It quickly went from taking in $900,000 a year to $1.9 million a year, said Mark Davoli, one of the owners. The Davolis were opening their second restaurant in Mandarin and had plans for that holy grail of restaurants: Franchising.

They hired a development company to get that moving and, not long after, the first franchised location opened in Jacksonville Beach. But that was it.

“Franchising is dead for us,” Davoli said. “That one experience has been great. But in franchising you only have so much control.”

So the restaurant they opened last year on Roosevelt Boulevard is company owned. So is the one they plan to open at Southside and Baymeadows in September. Company owned and company run.

But now they’ve brought in partners.

The ConSul Hospitality Group, consisting of three men with backgrounds in Outback Steakhouse and Carrabba’s Italian Grill, now owns 50 percent of Metro Diner. The Davolis will still run the company, Davoli said, but the new partners will help grow it.

“I could see two more local stores and then one outside the market,” he said. “There are so many options — Gainesville, Tampa, Orlando ...”

While Davoli and his brother John now spend their days going store to store, that would be much more difficult if those stores start spreading across the state.

That’s where the joint venture partner comes in, he said.

“He’d be sort of like a district manager, handling six or eight stores,” he said. “But in a company-owned store, he walks in with authority. With a franchise, he only walks in with advice.”

Mark Siebert, CEO and senior consultant with the iFranchise Group, works with budding franchises on a daily basis. There’s a lot of money to be made if you create a successful franchise, he said, but it’s not easy.

In an average month, 400 business owners approach him for advice. He ends up working with about four.

“A lot of folks just aren’t ready,” he said. “But if you can make it work, it’s where the real money is. You can grow with someone else’s money without having to give up equity. And you can grow a lot faster, with the franchisees doing the legwork.”

But it takes a good business model, a good return on investment and finding qualified franchisees. That means turning people down.

“The hardest thing is to say no to someone who has a $35,000 check he wants to give you,” Siebert said. “If you hire a manager and it doesn’t work out, you can fire him. With a franchisee, you’re going to be stuck with him for the next 20 years.”

You also have to make sure the franchisee isn’t too entrepreneurial.

“You don’t want someone who thinks your chicken could use more garlic,” he said.

Franchising obviously works for some restaurants. Firehouse Subs began in Jacksonville in 1994. Twenty years later it’s grown to more than 750 restaurants in 41 states and is often named one of the top franchises in the country.

“It’s a lot less intricate in the way it needs to be run,” Davoli said. “I don’t want to come across as criticizing Firehouse because they’re phenomenal at what they do. But running a full service restaurant is tougher. We’re making all our sauces, everything’s done in house.”

Long after Guy Fieri and “Diners, Drive-ins and Dives” came and went from Metro Diner, the show still airs from time to time. But the business that jumped way up has stayed up. Each of the four stores is taking in more than $2 million a year, Davoli said.

Sales are pretty even between breakfast and lunch. Lunch is stronger during the week, but weekend breakfasts always seems to have lines of people waiting to get in.

Weekdays average 400-500 meals per store, he said. But weekends get into the 800-900 range. And he’s counting on that when he expands, that people will continue to line up for Charleston Shrimp and Grits and Yolo Hala French toast.